her investment recommendation? Options: 1) Keep dividend per share growth at 1.65% 2) Dividend per share grows at 1% 3) Keep dividend per share constant at $2.46 4) Cut dividend by 30% and repurchase 10 million shares each year after the cut Recommendations: We recommend FPL to cut dividend by 30% in order to free up more cash to facilitate its growth and fight the upcoming competitions‚ and repurchase 10 million shares each year after the cut to offset the negative signaling impact
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you run out of space use the back of the page to complete your answer. Good Luck! Section 1- Multiple Choice- Circle the single best answer to each question 1. If an investor purchases shares in an unlevered firm and borrows on their own account to purchase some of these shares‚ the investor is pursuing the ______________ strategy. (a) milking the property (b) homemade leverage (c) excessive risk taking (d) Enron 2. Which of the following are true according to the Modigliani
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a large share repurchase to Blaine’s board? What are the primary advantages and disadvantages of such a move? Again‚ be specific. 3. Consider the following share repurchase proposal: Blaine will use $209 million of cash from its balance sheet and $50 million in new debt-bearing interest at the rate of 6.75% to repurchase 14.0 million shares at a price of $18.50 per share. How would such a buyback affect Blaine? Consider the impact on‚ among other things‚ BKI’s earnings per share and ROE‚
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Blaine still planned to continue its policy of holding prices firm in the face of competitive pressures. Because of BKI was over-liquid and under-levered‚ private equity buyer could purchase all of Blaine’s outstanding shares. So Victor Dubinski‚ CEO of BKI‚ face a stock repurchase decision in avoid of an unsolicited takeover. The company must determine the optimal debt capacity and capital structure‚ and subsequently estimate the resulting change in firm value and stock price. Main isuues: Blaine
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Technologies Case “I pledge my honor that I have not violated the Chicago Booth honor code for this assignment” Viral Patel 1. Linear’s historical payout policy has been to pay a quarterly dividend of $0.05/share and use any additional funds to repurchase shares to increase shareholder value. This kept their payout ratio to around 15% until about 2002 where this dividend payout moved the ratio to around 25% to 30%. Currently Linear is sitting on a large amount of cash ($1.5b) that
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a) Repurchase of stock=RM15x100000shares=RM1500000 Equity after repurchase of stock=repurchase of stock-amount borrowed |Scenario |Amount borrowed(RM) |Equity after repurchase of stock(RM) | |1 |0 |1500000-0=1500000 | |2 |187500 |1500000-187500=1312500 | |3
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Finance 7A10 Solutions: End-of-Chapter questions Chapter 7 (2nd Edition) Questions are: 2‚ 9‚ 15 7-2. Kokomochi is considering the launch of an advertising campaign for its latest dessert product‚ the Mini Mochi Munch. Kokomochi plans to spend $5 million on TV‚ radio‚ and print advertising this year for the campaign. The ads are expected to boost sales of the Mini Mochi Munch by $9 million this year and by $7 million next year. In addition‚ the company expects that new consumers
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Finance 2012 FINAL EXAM A. PROBLEMS (20 points each problem) 1. FAGE Manufacturing is currently an all-equity firm with 20 million shares outstanding and a stock price of $7.50 per share. Although investors currently expect FAGE to remain an all-equity firm‚ the company plans to announce that it will borrow $50 million and use the funds to repurchase shares. FAGE will pay interest only on this debt‚ and it has no further plans to increase or decrease the amount of debt. FAGE is subject to a
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their payout ratio has also been affected. From 2004 to 2006 there payout ratio has risen from 35% to 52.9%. This is due to the amount of cash spent on common dividends. The companies dividend per share has risen slightly over the past three years because of this‚ however‚ the company issued new shares with some of its acquisitions. The number of
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stands out from its competitors as it attempts to gain market share. Restaurant analysts have projected a five-year compound annual growth rate of 6.5% for the restaurant industry as a whole (Bruner‚ Eades & Schill‚ 2010). At the end of 2006‚ CPK’s sales growth rate was 15.6% while the average industry growth rate was 5%‚ meaning CPK’s growth rate was approximately 10.6% higher than industry average. Despite strong growth‚ the company’s share price declined 10% to a value of $22.10 due to economic issues
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